Private career colleges are under-regulated in Ontario

September 25, 2014

Private career colleges (PCCs) are independent businesses that offer adults the opportunity to obtain vocational and professional training in various occupations.

While PCCs are private businesses operating for profit in a competitive market, they are of public interest as they indirectly benefit from provincially funded job retraining programs and student loans. They also play a role in human capital development in the province. Flexible schedules, easy acceptance, and the short duration of most programs appeal to many Ontarians; in 2013-2014, approximately 53,000 full-time students enrolled in 420 colleges in hopes of quickly accessing the job market.[1]However, alongside the growing popularity of such institutions, reports of questionable practices and substandard quality of education are emerging.

While private career colleges are not funded directly by the Ministry of Training, Colleges and Universities (MTCU), they receive indirect provincial funding through employment training programs and student loans. In 2012-2013, $231 million was distributed to 15,787 students in 167 private institutions. Considering the high Ontario Student Assistance Program (OSAP) default loan rate for PCCs (amounting to 18.8 percent in 2013), the province's loans are becoming an indirect subsidy to these private businesses.[2] Furthermore, MTCU has recently introduced a retraining initiative called Second Career, which provides recently laid-off workers with up to $28,000 for tuition fees and has generated approximately $350 million in funding for PCCs.[3]

MTCU took steps to enhance regulatory oversight of PCCs in 2006 by enacting the Private Career Colleges Act. The Act includes guidelines for program approvals, fee collection, student contracts, financial security, instructional staff, advertising, and compliance measures and states that any training facility operating in Ontario must be registered with the Ministry and comply with the Act. It aims to protect students who attend PCCs by establishing a tuition refunds and student complaints system. Despite the Ministry’s efforts, though, more needs to be done to ensure compliance with the Act and its regulations.

Since the main source of revenue for private career colleges is tuition fees, they depend heavily on the number of students registering for courses. In the case of lower than expected enrolment, a private career college risks financial instability and even bankruptcy. To mitigate the risk of bankruptcy on students, PCCs must contribute to the Training Completion Assurance Fund. The fund helps ensure that students whose training is interrupted are able to complete their studies elsewhere or have their tuition refunded. Unfortunately, many unregistered private career colleges continue to operate in Ontario, and students attending such colleges are not protected in the event of an unexpected closure.

When dealing with illegal colleges, the Ministry has focused on encouraging unregistered schools to register voluntarily, instead of enforcing compliance with the Act’s regulations. For example, Bestech Academy Inc. received a warning from the Ministry in November 2006 to register under the Act.[4] For almost a year, the Ministry was aware the academy was operating illegally while falsely advertising itself as a registered institution. Instead of closing it, the Ministry continued to fund the school through adult retraining programs. For nearly two years, the academy disregarded numerous warnings and registration deadlines, and when it did apply for registration, it was clear that the school was not financially viable and had to shut down abruptly in October 2008, leaving many students without the promised training or a refund.[5]

The Task Force believes the Ministry should be more forceful in their approach against operators violating the Act to avoid such disastrous outcomes. An additional area of concern is the lack of data that prospective students can use to make informed decisions when choosing a school. While the Ministry collects and publishes key performance indicators (KPI) for community colleges and universities, such as the graduation rate, graduate satisfaction, and the graduate employment rate, it discontinued collecting similar data for OSAP-eligible PCCs in 2006. Currently, the Ministry is working toward publishing KPIs for PCCs, which will be collected by a third party consultant. The Institute believes that publishing performance metrics for PCCs will not only assist in achieving the goal of the Ministry to protect students, but will also provide policy analysts with better tools to evaluate the outcomes of the current regulatory framework.

A student’s complaint system, established by the Ministry, raises further doubts about the efficient functioning of PCC. Complaints of a lack of proper equipment, inadequate instructors, and a failure to deliver the promised number of training hours are common among former and current students of PCCs. The complaints are not limited to small or relatively new PCCs, but include well-established institutions catering to the needs of over 5,000 students in multiple campuses.

Considering recent evidence against PCCs, the time seems right to reconsider Ontario’s approach to private career colleges. The province, not private institutions, needs to provide educational programs that prepare students for the job market. The Institute strongly encourages the province to consider incorporating vocational training offered by PCCs into the public system, mainly via community colleges. This will ensure higher academic standards are set and that students rights’ are protected. The role of PCCs should be limited to providing hobby courses and short seminars.